Marked by a year of turmoil – including a CEO resignation, weak performance in the U.S. and pressures from an activist investor – Dr. Martens ended fiscal 2024 determined to return to growth.
To do this, outgoing chief executive officer Kenny Wilson said in a statement on Thursday that the company is implementing a cost action plan across the group in order to bring Dr. Martens back to growth by fiscal 2026.
Led by new chief financial officer Giles Wilson and the leadership team, Dr. Martens’ new plan targets a cost reduction between 20 million pounds to 25 million pounds, with savings from organizational efficiency and design, better procurement and operational streamlining.
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The company said it expects to see the benefit of this saving in fiscal year 2026, with the fiscal year 2025 benefit likely to be immaterial due to the costs of implementation. Further details and a progress update will be provided in Dr. Martens’ first half results in November, the company added.
“I am confident that the actions we are taking as we enter this year of transition will put us in good shape for the years ahead,” Wilson said.
This comes as the UK-based footwear company reported total revenue declined 12.3 percent in fiscal 2024 to 877.1 million pounds, down from 1.0 billion pounds in fiscal 2023. Net debt for the year increased to 357.5 million pounds, up from 288.3 million pounds last year, due to returns to shareholders, lower profits and increased lease liabilities.
The bright side of the year came with the company’s direct-to-consumer segment, which grew 2.4 percent in 2024 to 533.1 million pounds, up from 520.7 million pounds in 2023. This was offset, though, by a 26 percent decline in wholesale revenue to 344.0 million pounds, down from 479.6 million pounds last year.
Wilson added on Thursday that the company’s results were “as expected” and reflect continued weak USA consumer demand.
“This particularly impacted our USA wholesale business and offset our group DTC performance, where pairs grew by 7 percent,” Wilson said. “We have achieved robust performances in EMEA and APAC, and our supply chain strategy continues to deliver good savings. We are clear that we need to drive demand in the USA to return to growth in fiscal year 2026 onwards and are executing a detailed plan to achieve this, with refocused and increased USA marketing investment in the year ahead.”
The company added in its report that fiscal 2025 will be “a year of transition” for the business. As such, Dr. Martens said it expects group revenue to decline around 20 percent in fiscal 2025, driven by wholesale revenues down around a third. Combined with the cost headwinds which impact both halves, the impact of operational deleverage is significantly more pronounced in the first half. Overall results this year will therefore be very second-half weighted, particularly from a profit perspective.
